As of Thursday, January 5, 2017
The impact of deforestation might initially seem like a minor concern to apparel and textile businesses, but a recent report finds a link between revenue and deforestation for nearly 200 companies, including several high-profile companies in apparel, retail and textiles.
The report, “Revenue at Risk: Why addressing deforestation is critical to business success,” issued by the international nonprofit organization CDP, included data from 187 companies regarding their deforestation risk-management strategies and highlighting the impact of four key deforestation commodities—cattle products, palm oil, and soy and timber products.
While most of the respondents were commodities companies such asArcher Daniels Midland or giant consumer-product and restaurant businesses such as Colgate Palmolive andMcDonald’s Corp., the CDP report does include a handful of retailers and apparel manufacturers and brands.
All of the fashion companies—a list that includes Burberry Group, Coach Inc., Eclat Textile Co Ltd., Gildan Activewear Inc., Hanesbrands Inc., Kering, Makalot Industrial Co. Ltd. and Nike Inc. as well as retailers Inditex, H&M, Lojas Renner and Woolworth Holdings—surveyed their usage of timber and several looked at their use of cattle products in their supply chain.
Of all the companies surveyed, on average, “39 percent of company revenue is dependent on timber products.” For publicly traded companies, the report found that the revenue dependent on timber products at risk by deforestation is estimated to be up to $620 billion.”
A majority—80 percent—of all companies surveyed said they have identified “sufficient sources of sustainable material to meet future operational needs,” but several identified risks in their timber supply chain such as tightening regulations and the effect of climate change on availability and pricing.
Companies reported several strategies for moving toward a deforestation-free supply chain, including timber-use certification, a traceable supply chain, working with direct suppliers, conducting supplier audits and running training workshops with supply-chain partners.
According to the CDP report, companies faring well in their efforts to monitor their timber supply chain included Inditex, the Spanish parent company of Zara, and British retailer Marks and Spencer.
It was a similar story regarding cattle products. The survey found that the companies, on average, said 18 percent of their revenue was dependent on cattle products—putting an estimated $137 billion in revenue at risk by deforestation. Seventy-one percent of the companies surveyed said they had identified sources of sustainable material to meet their future needs.
The CDP report highlights the work of Inditex and Marks and Spencer as well as Kering, the French owner of luxury labels such as Alexander McQueen, Balenciaga and Gucci as well as action-sports brands Puma and Volcom.
CDP, which was formerly called the Carbon Disclosure Project, is an international nonprofit that provides a global system for companies, cities, states and regions “to measure, disclose, manage and share vital information on their environmental performance.”
According to Paul Simpson, chief executive officer of CDP, deforestation leads to 15 percent of global greenhouse gas emissions.
“Protecting the world’s forests will help underpin economic development for hundreds of millions of people around the world,” he said. “It will help ensure that companies relying on the commodities that contribute most to deforestation—cattle products, palm oil, soy and timber products—have access to robust and sustainable supply chains in the future.”
The CDP report was produced on behalf of 365 investors who represent investments of $22 trillion. Despite the report’s findings that “a significant share of income is derived from commodities linked to deforestation,” only 42 percent of the companies surveyed had looked at how the availability of these commodities would affect their “growth strategy over the next five or more years.”
The full report can be found at www.cdp.net.